The Philippines: Economic managers see lower than expected growth amid lockdowns

  • The return of strict lockdowns that crippled the country’s business centers anew likely slashed nearly 1% from the country’s economic growth for the entire year of 2021 already, a serious repercussion for the government’s failure to control coronavirus spread.
  • “I think it’s going to be lower than what we expected,” Finance Secretary Carlos Dominguez III, who is penciling in a 0.5% reduction in gross domestic product as a result of lockdowns, told Bloomberg on 6 Apr 21.
  • But Socioeconomic Planning Secretary Karl Kendrick Chua was more pessimistic. His estimates released on 5 Apr 21 showed the enhanced community quarantine (ECQ) in Metro Manila and four surrounding urban areas likely shaved off 0.8% points off growth in 2021, adding a warning that further extensions would be extremely damaging to the economy.
  • “ECQ alone does not reduce cases. It simply buys time,” Chua said. “Thus, we need to further intensify testing, tracing, quarantine, isolation, treatment, and vaccination.”
  • Economic officials are set to review on 8 Apr 21 their already watered-down target of 6.5%-7.5% for 2021, which has now become difficult to achieve.
  • NEDA’s estimates showed the prolonged ECQ came at the cost of 252,000 more jobs and 102,000 more poor Filipinos. This, in turn, translated to a daily household income loss of PHP2.1bn, or almost PHP30bn for the two-week period.
  • Not all is bad news however. According to NEDA, the restrictions is estimated to help avert 215,320 cases and 4,026 COVID-19 deaths
  • As it is, economic officials are sticking to being fiscally “prudent” despite the country’s growing pandemic needs. In same interview on 6 Apr 21, Dominguez said the government will once again tap the US bond market “before rates skyrocket” but did not disclose the amount to be borrowed and the timeline for the new debt plan. From there, the government will start “winding down” debts “sometime in 2022”.
  • “At this point in time we dont have any plans to introduce new tax measures. We have to look at potential revenue sources,” he said.

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